Small business group Isme has called on the Department of Social Protection to provide evidence after it said some businesses were actively undermining auto-enrolment, a new workplace pension scheme coming into force in January.
And it has also taken the Department of Social Protection to task for failing to keep employers in the loop on the new mandatory workplace pension, My Future Fund.
Minister for Social Protection Dara Calleary said earlier this week that whistleblowers and payroll providers had told his department that some employers were forcing staff to join a pension with just token contributions – as little as 1 per cent from the employer with no worker contribution – so that they would not have to engage with auto-enrolment.
“It is essentially a nominal contribution that is unlikely to yield any material pension benefit,” John McKeon, secretary general of the Department of Social Protection, said in a letter.
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The Minister is now looking to rush through legislation to close the perceived loophole and ensure that any occupational pension scheme offers workers at least as good a pension arrangement as the My Future Fund auto-enrolment scheme.
Isme, which said it had lobbied in favour of an auto-enrolment system for many years said it was “important that any commentary on employer behaviour reflects evidence”.
It said it understood the majority of SMEs were acting in good faith and complying fully with the rules as auto-enrolment is introduced. However, it added that it would support the Minister in tackling any malpractice.
“We are unaware of any employers who are not at least matching the AE contribution level of 1.5 per cent where they are offering a PRSA alternative,” the lobby group said.
And it accused the Department of keeping employers in the dark about the arrangements coming into force for auto-enrolment.
“While we understand that departmental communications with the accounting and payroll communities have been comprehensive, this has not been the case with employers,” Isme said.
“It is essential that employers receive clear, timely guidance, and that commentary on their behaviour is based on evidence rather than assertion.”
Under auto-enrolment, employers will be obliged initially to contribute 1.5 per cent of a worker’s gross salary to the My Future Fund, a figure matched by the employee, with the State adding €1 for every €3 contributed by the worker.
That figure will rise every three years until workers and their employers are putting 6 per cent of gross salary each into the scheme by 2035.
All workers earning more than €20,000 from one or more jobs who are aged between 23 and 60 and who are not yet members of an occupational scheme will be enrolled in the new arrangement from January.
The Department has held a series of in person and online seminars for employers on how the new arrangements will work with two more scheduled for Monday and Thursday of next week.
